Technical Update - FTSE 100 and 250 forming top and reversal patterns indicating short-term correction Technical Update - FTSE 100 and 250 forming top and reversal patterns indicating short-term correction Technical Update - FTSE 100 and 250 forming top and reversal patterns indicating short-term correction

Technical Update - FTSE 100 and 250 forming top and reversal patterns indicating short-term correction

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  FTSE 100 and 250 seems to be forming top and reversal patterns indicating short-term correction
Medium-term uptrends are intact and indicators suggest higher levels after a likely correction



Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team

FTSE 100 peeped just above its all-time high Friday. Opening below today and with divergence on RSI this could be the peak once again. If FTSE closes below 7,708 it could trigger a sell-off down to key support at round 7,451. Some support at around 7,600.
However, if FTSE manages to take out Fridays high at 7,907 the uptrend is set to be extended 8K.
Next few days likely to be key.

Weekly chart shows that there is no divergence on RSI which is and indication of higher levels on the medium-term.
FTSE 100 broke out of this sideways range between 6,700 and 7,660 and could have shifted the range upwards with potential to around 8,600 illustrated by the two vertical arrows, given that the Index can move back above 7,904.
However, the medium-term uptrend could exhaust around the 1.618 projection at around 8,117

If FTSE 100 closes below 7,661 the medium-term uptrend is likely to be reversed.

 

Source all charts and data: Saxo Group

 

FTSE 250 has formed an Evening Doji like top and reversal pattern. Coupled with divergence on RSI a correction is in the cards. A correction that could test the lower rising trendline. A close below and FTSE 250 is likely to test key support at 19,574.

Should buyers manage to lift the Index to close above 20,615 i.e. last week’s peak there is no strong resistance until around 21,485. See weekly chart.

 

RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)


Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.